By Takaya Yamaguchi and Kentaro Hamada
TOKYO (Reuters) - Tokyo Electric Power Co should be stripped of the responsibility for shutting down its crippled Fukushima nuclear power plant, according to a draft proposal by a panel of Japan's ruling party.
Tokyo Electric, or Tepco, has been widely criticized for repeated missteps, poor planning and a lack of disclosure in its efforts to clear up the site of the worst nuclear disaster since Chernobyl in 1986.
A task force formed by Prime Minister Shinzo Abe's Liberal Democratic Party (LDP) suggests that responsibility for the massive work of decommissioning the Fukushima plant be stripped from the giant utility in its current form - either by creating a separate unit within Tepco, breaking the unit off as a separate company or hiving it off as a government-affiliated, but independent, administrative agency.
A person familiar with the LDP panel's deliberations said it favors the option of creating a separate organization within Tepco to handle decommissioning - a job that could take decades as massive amounts of toxic water and spent fuel are removed and stored elsewhere.
The policy recommendations will be presented to Abe as soon as next week.
"We need to have a prompt conclusion to create a clear and realistic organization," said the draft proposal, reviewed by Reuters.
An earthquake and tsunami knocked out power and cooling at the Fukushima Daiichi nuclear plant in March 2011, leading to three reactor meltdowns and explosions that sent a huge plume of radiation into the air and sea, forcing some 150,000 people to evacuate.
Tepco has since lost $27 billion at the plant north of Tokyo and faces massive liabilities as it decommissions the facility, compensates evacuees and pays for decontamination of an area nearly the size of Connecticut.
The report drafted by LDP policymakers notes that more than two and a half years after the Fukushima disaster "recovery from and rebuilding after the nuclear disaster remains slow."
Ideas for reorganizing Tepco have circulated for months as it prepares to begin removing spent fuel rods from one of the crippled Fukushima reactors. Regulators on Wednesday gave the company the go-ahead for that operation, expected to start by mid-November.
Abe has vowed the government will take a more prominent role in addressing the Fukushima clean-up. The government aims to compile new policy measures within weeks.
The government effectively nationalized Tepco last year with a taxpayer-funded rescue. But there has been heated debate over direct government involvement in the company and over whether to spin off the Fukushima clean-up and let the remainder of Tepco focus on generating electricity for the Tokyo area.
Tepco has said it is not in a position to comment on its future structure. It is revising a business turnaround plan after falling behind on its financial targets. The company reports its first-half results on Thursday.
Tepco shares fell 1.3 percent to 525 yen on Wednesday. The stock was trading at around 2,150 yen before the march 2011 disaster.
(Reporting by Kentaro Hamada, Aaron Sheldrick and Osamu Tsukimori; Additional reporting by Yoshifumi Takemoto; Writing by William Mallard and Kevin Krolciki; Editing by Ian Geoghegan)